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Donate Today, Give Tomorrow

Donor-advised funds could allow you to lower your tax burden this year while you plan future philanthropy

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After Richard and Beth Franklin* had been married a few years, they decided to turn their love of cooking into a small business, eventually becoming a household name in the food services industry. The Franklins started out cooking and packaging meals for local middle schools in Texas, and spent 25 years growing their business into a national powerhouse that eventually supplied hundreds of college campuses.

Then in mid-2018, the Franklins sold their company and turned their focus to the next phase of their lives: retirement and giving back.

“Donor-advised funds are structured to meet the needs of a wide variety of donors.”

At first, the Franklins thought about endowing a professorship at their alma mater — but they didn’t know where to start. Sure, they knew how to run a successful company, but philanthropy? That was new.

The Franklins’ advisor suggested they consider a donor-advised fund using The Bank of America Charitable Gift Fund (CGF). With the CGF, they were able to take time to think through and define their philanthropic goals. And because the donor-advised fund enabled them to claim an immediate tax deduction for their initial contribution, the Franklins were able to lower their 2018 tax burden brought on by the sale of their business. At the same time, they were setting themselves up to endow a chair at their alma mater with that initial contribution — and make additional grants to charities of their choice in the future.

FOUR BENEFITS OF DONOR-ADVISED FUNDS

Your contributions in a donor-advised fund can sit — and potentially grow — as long as it takes you to decide on your philanthropic goals.
Less administrative time is needed chasing down charities to confirm you’ve got the right materials to claim your tax deduction. Everything  is in one place
You can make contributions in cash, stocks, bonds, restricted stock, private equity, hedge funds and nonfinancial assets, such as farms, timberland, mineral rights and real estate.
You can choose to label your fund anything you’d like, and you have the option to include your name, depending on your privacy preferences.

Exercising passion with purpose

Donor-advised funds sit squarely at the intersection of passion and purpose, says Ann Limberg, head of Philanthropic & Family Office Solutions at Bank of America Private Bank. “The CGF is an opportunity for clients who want to make charitable contributions now but determine how and where to distribute these funds over time,” says Limberg. “You can be very purposeful, strategic and impactful.”

You can let contributions made to the CGF grow in portfolios managed through Bank of America’s Chief Investment Office while you define your philanthropic goals and determine how best to fulfill them.

Choosing your charity

The CGF offers clients access to more than 1.8 million IRS-approved charities in the CGF directory of nonprofits. Investors with CGF accounts have access to that database as a resource for their philanthropic planning.

Donor-advised funds are structured to meet the needs of a wide variety of donors. “We have clients just starting out as philanthropists looking for help to determine how best to make their charitable impact,” says Don Greene, philanthropic client executive at Bank of America Private Bank. “We provide them with the tools to find charities addressing the issues they care most about.”

Other donors know exactly which charities they want to give to, how much they want to give and when they want to give. For these donors, the database may serve simply as a place to find appropriate addresses or contact information.

Naming your fund

The Franklins, the couple looking to endow a chair at their alma mater, wanted their gift to be anonymous, but they also wanted to see the name of their fund in the quarterly alumni magazine. They chose a name for their fund that they would recognize but no one else would, and then chose to attribute the grant to their CGF account name but kept their identities anonymous.

For philanthropists who value privacy, donor-advised funds provide two layers of anonymity. When you open a fund with the CGF, you can choose the name of your fund. You can name it after your family, or you could choose a name unrelated to you, such as the ‘Blue Skies Fund.’ With each grant, CGF clients may elect to have their name and the name of their fund accompany each grant or remain anonymous as appropriate.

How to get started

Opening a donor-advised fund is surprisingly simple. Most clients start by working with their advisor to complete a CGF application form. Once open, the CGF serves as a charitable recordkeeper, providing ongoing access to all charitable giving contributions and receipts. All documentation is in one place — the recordkeeping, the database of charities and materials to potentially claim a tax deduction. For the Franklins, that meant no wasted time and energy dealing with administrative tasks or chasing down a collection of charities at year-end for contribution receipts.

For more, visit The Bank of America Charitable Gift Fund and talk to your advisor about whether a donor-advised fund is the right solution for you. Accounts can typically be opened within 24 to 48 hours.

 

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